Wednesday, August 21, 2013

Perfume Business Plan Searching For The Hook

    I started writing a series of articles on writing a business plan -- a business plan for yourself, a business plan you that can guide your business before you go off in search of outside money. The heart of any business plan, particularly a business plan for a new perfume, is the "how" -- how you are going to do what you've told yourself you are going to do. And the heart of this "how" is how you are going to make sales.

    For some businesses, maybe even most businesses that, typically, find financing, it is pretty easy. You take the standard, for-your-type-of-business plan, dress it up with your own particulars, and you're ready for yourself, the investors, and maybe even banks.

    If you try to do that with perfume you're only kidding yourself. Perfume is different. Even different from fashion (rag trade) businesses which are tough enough. Ask yourself this: "In my new perfume business, with my new perfume, what exactly am I trying to sell?"

    If your answer is "perfume" you've already gone wrong.

    Advertising people talk of selling the sizzle, not the steak; the fantasy, not the reality; the customer's inner need, not the product.

    Your perfume -- until you develop a strong hook -- is nothing but a perfume, a product. Don't believe the myth that great packaging can sell your product. Don't kid yourself into thinking your perfume will sell because it has a great scent. Don't be fooled into thinking your perfume will sell because it has a great name. Don't be fooled into thinking your perfume will sell if only you can get it in the right stores.

    Your perfume will not sell unless, in your business plan, you've developed a very strong hook.

    A hook? Does that sound too non-fashionable? Too commercial? Too downmarket, even vaudeville? Perhaps, but it is essential. Let's look at your situation realistically.

    You want to launch your new perfume. Somehow you manage to get a great scent and great packaging. Your bottles are, or soon will be, filled and ready to ship. This is the easy part. Now you have to unload that inventory at a profit. If it was as easy as opening a new McDonalds, people would rush to invest with you.

    But the people with money aren't fools. It's not your perfume they want to see. That means very little to them. What they want to see is your plan to sell it and, if your plan doesn't define a very strong hook, they will understand that your proposition is hopeless.

    I've said that creating and packaging a perfume is the easy part. Anyone with a few dollars can do it. On a limited scale it doesn't take that much money.

    I'll also give you that, if your fragrances smells nice and is nicely packaged, you'll be able to get it placed in a handful of stores where, without that strong hook, it will not set the world on fire. Nor will it return your investment. If you don't believe me, try it and see for yourself. Then you might find the rest of this article more interesting.

    Your perfume will sell when people view it as affordable, available, and an absolute "must have." It's as simple as that. But not so simple to achieve.

    This then must be the heart of your business plan. The "real" story of how you are going to sell your perfume. The development of this incredibly powerful hook that will make your perfume a near necessity for enough customers to make your venture profitable.

    You may be able to sell 1,000 bottles of your perfume though a single retail store in an incredibly short period of time if you can implant in the minds of one thousand people a compelling desire for your perfume.

    This is not just "oh, how nice!"

    There is no formula in any book or web page to guide you in creating this near magical hook, a hook that will make your perfume not just "nice" but absolutely compelling. This is where you need to ponder much, study others much, and not just marketers of perfume. You must draw on every ounce of creative thinking you possess. You must think like a dealmaker, a marketer, an infomercial pitchman. You must study contests, coupon deals, charity tie-ins, marketing strategies from the past and the present.

    You need to become the customer, night and day, until you can think like the customer and reject all hooks that are weak or misguided.

    What can you come up with? What will you come up with? Whatever it is, edit it well. Put it to your best "reality" test before you include it in your business plan.

    I'm working a new hook for my perfume so I appreciate how difficult it is.

    If you're not exhausted from reading all this, you'll find some guidance on the "hook" subject in "Footnotes #2" to my business plan article.

    Today is Wednesday. It will be ready for you by Friday (August 23, 2013). Take it seriously as I'm grappling with the same problems that you are.


Monday, August 12, 2013

The Business Plan You Really Need

    Bankers and investors, even "angel" investors, are constantly fussing, "show us your business plan." It can  be annoying and embarrassing when not only do you not have one, you're not at all clear as to how you would prepare one.

    The one person who is the least likely to ask you for a business plan is you, yourself. Why? Because you "know" your plan -- or, more commonly, you know you don't have a plan and are hoping to stumble your way to success without one.

    Why all the fuss about business plans? Why do bankers and investors require one? And why, of all things, would you want one for yourself when you're not trying to borrow money?

    The answer is simple. Preparing a business plan forces you to clarify your thinking, bring your goal into sharp focus, and plot a realistic series of steps by which you can reach that goal.

    When your thinking is muddy, trying to write even the most basic business plan can be painful because it dashes your fantasies of quick, easy success and forces you to take an inventory your true resources.

    I'm working on a business plan now for a small company that would be happy to make even modest sales in a small market but, thanks to this business plan, they are forced to confront several obstacles which they find troubling. These obstacles are troubling largely because they lack sound research that will tell them whether these difficulties will be fatal or whether they will amount to nothing.

    The research they need to make this determination will not be expensive, nor will it prove difficult. But to acquire the facts will require a plan within a plan, which in this case will amount to next to nothing.

    But the point is that, had they not decided to prepare a business plan, they would not have put their finger on a problem and the need for facts to explore this problem and guide their planning.

    What would they have done minus this business plan? They would continue to dream while worrying about an obstacle. The project would never get started.

    Good business plans aren't fussy stuff to impress bankers and investors. The person that benefits most from a good business plan is you. A good business plan, perhaps no more than a page or two, can hang on your wall and be your daily step by step guide toward accomplishing your goal -- which is success.

Thursday, August 8, 2013

Why it's hard to make money if you have only one product to sell

    A lesson from a mentor when I was very new in business: "Before you offer your first product for sale, have a second product ready." Why? Because the cost of making that second sale will be much lower then the cost of making you initial sale. Thus your transaction with the customer becomes more profitable, with no additional advertising expense.

    Did you know that many marketers are willing to take a loss on their first sale to acquire a new customer, because they know, from past statistics, that each new customer will bring them more than enough profit to make up for the money lost on the first sale. The hard part is acquiring new customers.

    Ask yourself why your wireless provider gives you a mobile phone for far less than the cost of the phone to them. Or why does that ink jet printer cost so little while the ink costs so much!

    Wise marketers know so well that acquiring a new customer is many times more expensive than making additional sales to an existing customer. Think of the Apple computer business for an example. Once Apple acquires a new customer -- say a teen or college student -- that customer is likely to continue buying Apple products for YEARS .. perhaps even FOR LIFE.

    Direct sellers who ship their products know that the best time to get a second order from a customer is before the first order has even been delivered! Why? Because they are catching the customer at the high point of their enthusiasm -- the point at which the product which has been ordered is still a fulfillment of a dream rather than something tangible which can be examined. The marketer is credited with providing this seemingly miraculous wish fulfillment. When the product arrives the customer, hopefully, will still be happy with it but now it is tangible and some of the mystique rubs off as it is more easily compared to someone else's product.

    Let's talk about your perfume. Are you about to launch a perfume? What else will you be selling? Look at why that second product is so important. Start by considering the time and effort and money you put into making a sale. Deduct that from the revenue you made on that first sale. Perhaps now that sale doesn't look so profitable and you wonder how others are making so much money.

    Let's assume your customer was happy with the perfume you sold her. Now let's suppose you had a second product available, right then and there, that your happy customer could, and would, buy. The sale of that second product can be made without all the fuss, effort, and expense that went into making the initial sale, hence you get to keep -- as profit -- a larger portion of the revenue you received.

    In selling perfume you probably will not want to hit your customer with a second perfume before she has used a bit of the first. But, if your first product is a woman's fragrance, your second, the follow-up product, might be a man's cologne, or a scarf, or a bracelet.

    Remember, for this second product you're not putting money into advertising. You're using the customer's enthusiasm alone to make the sale.

    When you have a customer who is responding to your sales presentation, don't lose out on potential revenue from that customer by not having a second product to sell!